Investment firm to buy Mexico's No. 2 chain

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MEXICO CITY -- A private investment firm owned by one of Mexico's richest businessmen has reached an agreement in principle to purchase MMCinemas, the nation's second-largest theater circuit.

Empresarios Industriales de Mexico, the investment vehicle of Mexican mining baron German Larrea, plans to acquire an 80% stake in MMCinemas within 90 days, an MMCinemas spokesperson said Thursday. Additionally, it has an option to buy the remaining 20% share at a later date.

Latin American Movie Theatres, which operates under the brand names MMCinemas and Multimax, is currently owned by private equity firm Southern Cross, U.S. investment bank Morgan Stanley and minority shareholder Henry Davis. They purchased the circuit from Mexican media company Grupo Multimedios in 2006 for more than $100 million.

MMCinemas has 817 screens, making it the second-biggest chain in Mexico. The company plans to build 150 screens this year. Should the transaction get the green light, as expected, Empresarios Industriales de Mexico is looking to expand at an even faster pace, primarily in mid-sized Mexican cities.

"Their goal is to be even more aggressive," an industry source said.

MMCinemas operates in 22 states, but has steered clear of theater-saturated Mexico City.

Its main competitors are Texas-based Cinemark and Mexican-owned Cinepolis, the nation's No. 1 theater chain.

Currently, Mexico has about 4,000 screens and it ranks among the world's top five markets in boxoffice attendance. Admissions here rose 5.6% last year, according to the national film chamber.

The Mexican investment firm has dubbed its new entertainment division Entertenimiento GM de Mexico.